U.S. Pat. No. 4,553,165, issued Nov. 12, 1985 to Bayer discloses a block transform image processing method for removing noise (such as film grain noise) from a digital image, produced for example by scanning a photographic image. According to the method disclosed by Bayer, the digital image is divided into blocks. Each block is transformed, for example by Walsh Hadamard transformation, to yield blocks of transform coefficients. The transform coefficients are modified in a nonlinear manner to reduce the noise in the image block, and the blocks of modified coefficients are inversely transformed to yield the processed image having reduced noise. The effect of this processing is to reduce the appearance of noise in the processed image while avoiding the introduction of an artifact caused by other prior art noise reduction processes in which false "edges" would appear in smooth areas of the the processed image (such as facial features).
While the technique disclosed by Bayer is indeed effective to avoid the appearance of false edges, while reducing the appearance of noise in the processed image, extensive testing by the present inventors of the image processing method employing the Walsh-Hadamard transformation has revealed the presence of another class of undesirable artifacts in the processed images that is not effectively avoided by the Walsh-Hadamard block transformation noise reduction method. These artifacts occur in areas of the image having fine texture, whereby the texture is replaced by smooth appearing areas. This artifact is particularly noticeable and objectionable in such image features as grass, hair, and textile patterns such as carpet. Careful investigation has also shown that the Bayer method somewhat reduces the sharpness of edge detail.